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Opening Roth IRAs For Your Children


As parents, it is natural that we want to help our children save for their future and build financial literacy. Looking for ways to help them save money in ways that are not only tax efficient but will grow throughout life is a generous, strategic gift that gives a child life.

But how to do it?

Roth IRAs, when open to minors, can be a great tool for achieving major wealth-building benefits. Basically, you are depositing money that will grow tax-free and be available for tax-free withdrawal when your child turns 59 ½. Of course, that is still a long time. On the same subject : Third stimulus check: What these financial gurus say you should do with the money. When it comes to building wealth, time is really the best tool there is.

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Can anyone do that?

Not everyone can qualify, but almost every child who has a job. On the same subject : If Your IRA Holds An MLP, Beware Of The UBIT – Seeking Alpha.

The money put into this account must be based on the income earned, so you cannot simply give the money to your child and put it in a Roth IRA. But if your child has a summer job mowing the lawn, babysitting, or packing groceries, that counts as earned income.

Let’s say they make $ 2,000 over the summer with this business. You can encourage them to put that money in the account or you can take any amount of your own money up to that $ 2,000 and put it in their account yourself.

Because of the income requirement, you probably can’t get away with opening these accounts for young children, but you can for a teenager.

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How to make the most of the third stimulus check  Seattle Times

How do I open an account?

Roth IRAs can be opened for minors, but they will need to be custody accounts which means they are in your name and not in your child. This may interest you : Do you have to take distributions from an inherited Roth IRA?. To open it, you just need to go to any major brokerage house or financial institution and fulfill the request.

Opening this account is a great way to start teaching the importance of saving and the value of the dollar. In addition, it is a huge opportunity for donations, intergenerational wealth transfer and tax planning.


Teaching your child how to save money from an early age will set him on the path to success in the future.

The Roth IRA will give them a chance to increase their savings over perhaps 50 years in a way that is exempt from all future income taxes.

For smarter tax moves, I made my own e-book, Pay less tax now, available for free download at www.lowtaxbook.com.

The opinions expressed in this comment are those of the authors and do not necessarily reflect the opinions of Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations to any individual. It is recommended that you contact your financial professional, lawyer or tax advisor regarding your individual situation. Comments regarding past performances are not intended for future viewing and should not be viewed as an indicator of future results.

Securities offered through Kestra Investment Services, LLC (Kestra IS), a member of FINRA / SIPC. Investment advisory services offered by Kestra Advisory Services, LLC (Kestra AS), a subsidiary of Kestra IS. Brotman Financial Group, Inc. and BFG Financial Advisors are not affiliated with Kestra IS or Kestra AS.

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